“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“The big money is not in the buying and selling. But in
the waiting.” - Charlie Munger, Vice Chairman, Berkshire Hathaway
“In my decades of investing experience, I have not seen
such mindless and uninformed speculation as I have witnessed
recently. Indeed, in nominal dollar terms...it is far in excess of the
dot.com boom.” – Doug Cass.
“I never imagined that I would see the day that the
Chairman of the House Judiciary Committee would step forward to call for raw [Supreme]
court packing. It is a sign of our current political environment where rage
overwhelms reason.” - Professor Jonathan Turley, honorary Doctorate of Law from
John Marshall Law School for his contributions to civil liberties and the
public interest.
IHS MARKIT COMPOSITE MANUFACTURING / SERVICES (Markit
Economics)
Private sector firms across the US signaled an
unprecedented expansion in business activity in May. Growth was driven by the
fastest service sector upturn on record, with the increase in manufacturing
output also accelerating amid stronger client demand... The steep rise in costs
fed through to the sharpest increase in output charges since data collection
began in October 2009, with record rates of inflation registered for both goods
and services as soaring demand boosted firms’ pricing power.” Press release
at...
https://www.markiteconomics.com/Public/Home/PressRelease/392edb090fd34a7cb68bf22a1ddb7789
EXISTING HOME SALES (YahooFinance)
“Existing home sales fell 2.7% to a seasonally adjusted
5.58 million in April, from a month earlier... "Low inventory continues to
hinder sales activity," said Lawrence Yun, NAR chief economist.” Story
at...
https://finance.yahoo.com/news/existing-home-sales-april-2021-140007789-140119590.html
IS THIS THE BIG ONE (Heritage Capital)
“In a word, no. It’s just another normal and healthy
pullback in a young bull market. As you know, I do think we will see a 10%+
market correction this year with the peak forming between May 1 and September 1
as I have said before. However, the data do not suggest that high is already in
place.” Commentary at...
https://investfortomorrow.com/blog/is-this-the-big-one-i-am-coming-elizabeth/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:30pm Friday. US total case numbers are on the left axis; daily numbers
are on the right side of the graph with the 10-dMA of daily numbers in Green.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 slipped
about 0.1% to 4156.
-VIX dropped about 3% to 20.15.
-The yield on the 10-year
Treasury dipped to 1.619%.
Here’s Friday’s run-down of some important indicators.
These tend to be both long-term and short-term, so they are somewhat different
than the 20 that I report on daily.
BULL SIGNS
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA of the % of issues advancing on the
NYSE (Breadth) is above 50%.
-The size of up-moves has been larger than the size of
down-moves over the last month
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500.
-Slope of the 40-dMA of New-highs is rising.
-Long-term new-high/new-low data is rising sharply.
NEUTRAL
-VIX is flat - neutral.
-The 5-10-20 Timer System is HOLD; the 5-dEMA and 10-dEMA
are NOT both above the 20-dEMA.
-We had a 4 Distribution Days recently, but not enough to
send a signal.
-Bollinger Bands – currently neutral.
-RSI.
-Overbought/Oversold Index (Advance/Decline Ratio).
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means the signal is leaning bearish.
-The Fosback High-Low Logic Index is neutral.
-There have been 6 Statistically-Significant days in the
last 15-days. This signal can be Bearish or Bullish. Let’s call it neutral now.
-There have been 3 up-days over the last 10-days.
Neutral.
-There have been 9 up-days over the last 20 days. Neutral
-Statistically, the S&P 500 gave a panic-signal, 12
May. This one can be bearish or bullish. The signal has expired.
-The market has broadened out; 16.6% of all issues
traded on the NYSE made new, 52-week highs when the S&P 500 made a new
all-time-high 7 May. (there is no bullish signal for this indicator.)
Currently, the value is above average and suggests that if we do have a
correction from here it would likely be less than 10% - maybe. This number is
getting so high that one wonders whether it is too bullish.
-14 May, the 52-week, New-high/new-low ratio improved by 0.7
standard deviations, somewhat bullish, but not enough to give a signal.
-The S&P 500 is 11.6% above its 200-dMA (Sell point
is 12%.). This value was 15.9% above the 200-dMA when the 10% correction
occurred in Sep 2020.
-The S&P 500 is out-performing Utilities ETF (XLU),
but not by much, so I’ll call this one neutral for now.
-48% of the 15-ETFs that I track have been up over the
last 10-days.
BEAR SIGNS
-The 10-dMA of issues advancing on the NYSE
(Breadth) is below 50%
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 19 May.
-The Smart Money (late-day action) is falling. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-McClellan Oscillator is bearish.
-MACD of S&P 500 price made a bearish crossover 22
Apr.
-Breadth on the NYSE compared to the S&P 500 index is
bearish – the Index is too far ahead of stocks advancing on the NYSE.
-Short-term new-high/new-low data is falling.
-My Money Trend indicator is falling.
-The smoothed advancing volume on the NYSE is falling.
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 9
bear-signs and 6 bull-signs. Last week, there were 8 bear-signs and 9
bull-signs.
The Bear-signs outnumbered the
Bear-signs, but not by much. There is
only 1 top-signal; the Index is too far ahead of breadth.
The daily sum of 20 Indicators
slipped from -4 to -5 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dropped from -51 to
-58 (These numbers sometimes change after I post the blog based on data that
comes in late.) Most of these indicators are short-term and many are trend
following.
The Long Term NTSM indicator
ensemble remained HOLD. Price is Bullish; Volume is bearish; VIX, &
Sentiment are neutral.
I did buy some today. I added
Goldman Sachs (GS) and sold JP Morgan (JPM). I also added Boeing (BA). I think
BA has bottomed.
I am at a conservative stock-allocation of 45% in stocks.
I am neutral on the stock market. Indicators are really reasonably flat; price
action isn’t helping to sway me in either direction. It’s a worry that the
S&P 500 has gone nowhere in more than a month. We’ll see.
MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs
(Ranked Daily)
The top ranked ETF receives
100%. The rest are then ranked based on their momentum relative to the leading
ETF.
*For additional background on
the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
TODAY’S RANKING OF THE DOW 30
STOCKS (Ranked Daily)
Here’s the revised DOW 30 and
its momentum analysis. The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
For more details, see NTSM
Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
FRIDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained BEARISH on the market.
Market Internals are a decent
trend-following analysis of current market action, but should not be used alone
for short term trading. They are usually right, but they are often late. They are most useful when they diverge from
the Index.
Using the Short-term indicator in 2018 in SPY would have made a 5% gain instead of a 6% loss for buy-and-hold. The methodology was Buy on a POSITIVE indication and Sell on a NEGATIVE indication and stay out until the next POSITIVE indication. The back-test included 13-buys and 13-sells, or a trade every 2-weeks on average.
As of 19 April, my
stock-allocation is about 40% invested in stocks. I hadn’t intended to drop
this low, but I took profits in both Boeing and Intel due to their dropping out
of the top 3 in momentum. I’ll move back in when conditions appear more
favorable.
You may wish to have a higher
or lower % invested in stocks depending on your risk tolerance. 50% is a
conservative position that I consider fully invested for most retirees. As a
retiree, 50% in the stock market is about fully invested for me – it is a
cautious and conservative number. If I feel very confident, I might go to 60%;
if a correction is deep enough, and I can call a bottom, 80% would not be out
of the question.
The markets have not
retested the lows on recent corrections and that left me under-invested on the
bounces. I will need to put less reliance on retests in the future.
